Inventory Report: How it Benefits Your Retail Business?
Many small businesses don’t even know where their inventory report is or how much they have. It’s so bad that nearly half are either too lazy to keep track or use a manual method like Excel spreadsheets.
Data is critical to the success of any business, and it’s not as easy as one might think. You can’t just rely on sales numbers; you need accurate data from retailers to make those decisions correctly.
So what is an inventory report?
Well, it’s the reporting that retailers need to have to track their store items and other products. The following are a few types of reports you can create for your business.
What exactly is an inventory report?
An inventory report is a summary of what you have on hand and where it’s going. It tells the status, performance, and details about products that are selling best.
Inventory reports are an essential part of any business.
What is the purpose of creating an inventory report?
“Inventory reports are important to monitor the biggest and most expensive asset of your business,”
Says Elliot Walters, implementation manager at Stitch Labs. Retail businesses rely on inventory to generate revenue and profit — without it; you don’t have anything to sell.
Inventory reporting is all about the insight it gives retailers into their business. Data-driven companies can use inventory reports for the big picture and hyperfocused views of what’s going on.
“Retail is an art and a science, and inventory reporting is an important piece of that science,”
Says Chris Guillot of Merchant Method.
“They help you tell a compelling business narrative that’s backed by data. That data doesn’t have to be ‘big data’ because directional data is more informative than no data at all. Inventory reporting is a key part of that science,”
Explains Merchant Method’s Chris Guillot.
“Retail is both an art and a science.” They assist you in creating a compelling business story that is backed up by statistics. There’s no need for that data to be big because directional data is more useful than no data at all.”
Walters shows how data-driven insights work in practice. The merchandising team’s ability to re-merchandise to prevent theft and the operations team’s ability to discover SKU integrity mistakes and regions of internal theft can be highlighted by tracking inventory decline over time.
“One report will disclose actionable across several departments with inventory reporting.”
The market is constantly changing, so keep track of the inventory reports. If you’re not sure what type is best for your business, take a look at these six stock and sales reports.
How to Make an Inventory Report?
Ask yourself what you want to obtain out of the inventory report before you do anything, according to Juli Lassow, founder and principal of JHL Solutions.
“Outline the key performance indicators (KPIs) that your company will track,”
She advises. This will keep your reporting process focused and actionable because there are many KPIs to evaluate.
When running a business, it’s essential to have the right technology. Click To Tweet
The inventory management software should be reliable and able to avoid human errors and sync data across other tools.
It turns out that one of the leading causes of inventory distortion is software incompatibility. 15% of companies experience this issue.
Modern technology, such as Vend’s POS system, will make inventory reporting more straightforward, accurate, and valuable than traditional methods like Excel spreadsheets and manual reports.
“Retailers with a POS system can generate reports more easily than those not tracking sales and inventory at the SKU level,”
Once your credentials are in order, it’s time to collect the data.
1. Make a shopping list.
To export your inventory information, find the proper database for you. You will need to input basic info like how many units are on hand and where they’re located. This is important because it includes which variants of products there are and serial numbers.
The questions you ask will depend on the available information.
2. Determine your timetable.
It would help if you were sure that you’re comparing apples and oranges when you look at metrics. For example, a company has data from the last year of its operations and hourly data. In that case, they might find discrepancies in those numbers because it’s hard for them to compare performance on an annual level with something more granular, like hours.
If you’re comparing periods, make sure to compare apples with apples. For example, the November sales numbers will be significantly lower than June’s because of holiday shoppers.
3. Execute your reports
It’s critical to evaluate which reports you’ll conduct and how you’ll calculate the results. Guillot recommends starting with auto-generated or canned reports.
“POS dashboards and canned reports are a great place to start your analysis. But keep in mind that without an enterprise reporting system or best practices to recording your inventory ownership over time, it’s the rate that you’ll get an accurate look at your end-of-period (EOP) inventory,”
How frequently do you create inventory reports?
You should always check your inventory before and after a busy period to ensure you don’t run out of stock. You can even do it weekly or monthly if that works for you.
Every week and every month
“Export data weekly and monthly from your POS, ecomm storefront, and inventory management solution to get inventory reports. Different teams can benefit from weekly and monthly reporting. A weekly report, for example, might help the merchandising and marketing team examine how the debut and placement of a new product affect sales of current ones,”
Walters advises. According to him, it also depends on the type of data and who is using it.
Following busy selling seasons
After a hectic selling season, Guillot emphasizes the necessity of looking at the numbers.
“After every key period of business, do inventory reports. After each week, month, quarter, half-year, and year, this frequently entails preparing and reviewing reports. Other noteworthy events, such as the holiday season, should also be reported on. Your sales patterns are crucial, but so is the increase over time. Think holiday 2019 vs. holiday 2018.”
Based on your company’s activities
Look at your business operations. Do you place your orders daily, weekly, or monthly basis?
Inventory reports contain essential insights to inform purchasing.
“Keeping current on inventory health is critical to maintaining customer satisfaction and corporate profitability in retail, given the speed of change,”
Inventory report types to build.
As we said before, there are different types of inventory reports. Some can be used for more than one purpose, and some might only give you the numbers without any context or insights.
In addition to that, you need to tie the data together.
“Inventory can’t be managed in a vacuum from other key merchandising metrics. And it can’t be handled solely by the inventory planning team,”
So, where to start?
“First, review your auto-generated reports,”
A word of warning, though:
“Keep in mind that without an enterprise reporting system — or best practices to recording your inventory ownership over time — it’s rare that you’ll get an accurate look at your end-of-period (EOP) inventory,”
“EOP inventory is what any size retailer needs to unlock the true value of inventory reporting.”
1. Availability of inventory.
There are many reasons to monitor inventory levels. Inventory on-hand reports can show how much capital you have in your company, and they help with reordering, forecasting, budgeting, and financial planning.
2. Stock is running low.
With returns, overstocks, and out-of-stocks, it costs retailers $1. Seventy-five trillion every year, it’s no wonder that these issues are so costly to the industry.
To avoid running out of stock, it’s essential that you know which items are low on inventory.
If you keep running out of stock, your customers will get sick and tired of coming to your store. They’ll start looking elsewhere for their shopping needs and eventually stop relying on you.
One of the benefits of being a retail business development manager at Vapouriz is that you have access to excellent analytics tools. Click To Tweet
They regularly review their reorder levels, so they never run out.
3. Report on Product Performance
You can use these reports to see which products are the most popular and profitable. You might also look at the gap between purchases.
For example, if an item is not selling quickly despite having a lot of traffic and sales- this might be due to some factors like low margins or slow turnover. On the other hand, you may want to consider increasing your order size on popular items always in demand.
The sales velocity and aging inventory reports, according to Walters, should be used.
“Having a visual representation of sales performance by style can help your creative team plan, merchandise, and market,”
In 2017, the world’s shrinking retailers lost a combined $100 billion in America alone.
It’s easy to think that only 15% of sales in retail stores are profit, but it may be time for you to rethink your strategy. That small percentage is money that you put the hard work into earning.
If you notice that your shrink is rising, there might be a more significant problem. You can use these reports to compare rates over time and determine what needs fixing.
5. Comparisons of benchmarks
“Inventory visibility isn’t a one-time affair,”
Even though industry averages are helpful, they don’t consider the unique circumstances that each retail store experiences. The most accurate comparison you can make is one with yourself.
You’ll be able to create benchmarks in your data over time, so you’ll be able to see how well you’re fulfilling those goals.
“Each report will reveal a slice of what’s happening in your business,”
“Triangulating the information of each of these reports over time will sharpen your analytical skills and help you manage future inventory investments.”